A September 14 hearing of the House Oversight and Investigations Subcommittee—originally intended to probe the due diligence exercised by the U.S. Department of Energy (DOE) and the Office of Management and Budget (OMB) in reviewing a loan guarantee awarded to California-based Solyndra, Inc.—turned into a public pillory, during which doubt was cast on the capability of the DOE Loan Guarantee Program to invest wisely and to create green jobs.

In 2009, Solyndra was the first company to receive a DOE loan guarantee funded with stimulus dollars. Just two years after getting $535 million in taxpayer dollars, and being touted as a model for how the government’s investments in green technology should work, the company has filed for bankruptcy and been raided by the FBI.

Now, Republicans are blaming the current, Democratic administration, on the one hand, for being too involved with Solyndra's funding; and, on the other, for being asleep at the switch as Solyndra fell apart. What’s more, they are looking at DOE funding to date and questioning whether the loan guarantee program has created the number of permanent green-tech jobs it promised.

According to the DOE’s own site, the $38.6 billion loan guarantee program that the Obama administration pledged would produce or save 65,000 jobs has created just 3,545 permanent positions in the clean energy sector.  (With $17.2 billion in loans already granted, that comes out to $4.8 million per permanent job.)

The administration also counts the number of jobs saved in the auto sector by electric vehicle investments, which would add another 40,000 to the bottom line—33,000 of them, at Ford.  However, several economists interviewed by The Washington Post said they doubt the loan program saved that number of jobs at Ford.

“I always take these job estimates with a big grain of salt,” Josh Lerner, a Harvard Business School professor who has written about failed government efforts to stimulate targeted industries, said in an e-mail. “There tends to be a lot of fuzzy math when it comes to calculating these benefits (regardless of the party taking credit for the program).”

In a statement at the beginning of the hearing, U.S. Rep. Fred Upton (R-MI) , Chairman, Committee on Energy and Commerce, announced his intention to “[raise] several questions about whether the administration did everything it could to protect taxpayer dollars.”  

He said, “I want to know what the Solyndra failure means for the loan guarantee program. Was Solyndra just one bad bet by an administration rushing to claim credit for the first loan guarantee, or is it the tip of the iceberg? DOE has closed over $8 billion in loan guarantees to other “green tech” companies, and it has about $10 billion left to spend in the next few weeks, before the September 30 deadline. If the administration was so wrong about Solyndra after nine months of due diligence, how can it possibly exercise the proper controls when doling out $10 billion dollars in a matter of weeks? In this time of record debt, I question whether the government is qualified to act as a venture capitalist, picking winners and losers in speculative ventures .…”

U.S. Rep. Cliff Stearns (News - Alert) (R-FL), Chairman, Subcommittee on Oversight and Investigations, said:  “We are here today to ask those very questions and more. If Solyndra really is the ‘litmus test for the loan guarantee program’s ability to fund good projects quickly,’ as DOE’s stimulus advisor called it in an email to DOE officials, I am very concerned about where the $10 billion DOE has left to spend before the September 30 deadline is going.”

In his testimony before the Committee, Jonathan Silver, Executive Director, Loan Programs Office, U.S. Department of Energy, came back swinging—insisting that, to remain competitive against China and other global trade partners, the United States must invest in its own technology, “recognizing that support for innovative technologies comes with inherent risk.” He said that, “Congress … appropriated funds to account for such risks. Congress believed that the overall positive impact that the program, and its many successful investments, would have on our national clean energy economy outweighed the associated risk.”

Silver pointed out that China, this year alone, has provided more than $30 billion in credit to the country’s largest solar manufacturers through the government-controlled China Development Bank. “That’s roughly 20 times larger than America’s investment in the same time period,” he said, “Moreover, this is just what they have announced. China has undoubtedly extended support well beyond what they have disclosed publicly. Why is China making this investment? Because the race for solar manufacturing jobs is a race worth winning. Over the next four decades, this is a global market estimated to be worth trillions of dollars.”

Silver also asserted that his department had done a thorough review of the loan. “Based on this analysis,” he contended, “[we concluded] that the Solyndra project—while not without risk—was a worthy and promising project [that] … had demonstrated…a ‘reasonable prospect’ of repaying the government’s loan.”

What’s more, he said, the federal government was not alone in its assessment of Solyndra’s potential, “Some of America’s most sophisticated professional investors collectively invested nearly a billion dollars in the company after conducting extensive due diligence of their own —almost all of it invested

before a single dollar of taxpayer funds was provided to the company.

“The question is whether we are willing to take on this challenge, or whether we will simply

cede leadership in clean energy to other nations and watch as tens of thousands of jobs are

created overseas,” Silver concluded “We were once the leaders in this field, and we can be again. As President Kennedy said of the mission to the moon: ‘If we are to go only half way, or reduce our sights in

the face of difficulty, in my judgment it would be better not to go at all.’”

Stay tuned for more developments: Solyndra executives are expected to testify before the committee again, as early as next week